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Alibaba to invest US$1.5B in Hong Kong International Airport facility

Hong Kong Int’l Airport

Last week, Alibaba released plans to expand the network of its logistics arm, Cainiao, into Asia, Europe and the Middle East, underpinning its international e-commerce expansion effort.

Yesterday, the company released its plans to drop US$1.5 billion on a logistics center project at China’s Southern-most hub, Hong Kong International Airport (HKIA).

Image result for Alibaba to invest US$1.5 billion in Hong Kong International Airport facilityLast week, Alibaba’s logistics-affiliate, Cainiao, announced plans to open five global hubs in Asia, Europe and the Middle East “to meet the surging cross-border e-commerce needs”.Today, Hangzhou-based Cainiao unveiled a separate US$1.5 billion investment in a joint-venture logistics center at Hong Kong International Airport (HKIA), what will effectively be the sixth hub.

With six large-scale logistics centers now in development, it seems only natural that airfreight capacity will follow.

With the investment, Cainiao will own a 51% controlling stake in the new joint venture logistics hub, with China National Aviation Corporation (CNAC) and YTO Express holding minority shares of 35% and 14% respectively.

It appears that the tripartite venture has reached an agreement with HKIA to build a 380,000 sq. meter facility adjacent to the airport.

The facility is expected to commence operations in 2023 and will gradually ramp-up operations to ultimately handle “tens of millions of parcels every year” with cargo throughput of about 1.7 million tonnes per year, according to a release from Cainaio.

 

Cainiao already charters space on flights between China and Europe, and Asia and Europe, just how big will its own-operated network get?

It remains unclear if the facility will handle cargo for other carriers and compete directly with existing air cargo terminals such as HACTL, Cathay Pacific Cargo Terminal and AAT, or if it will operate solely for Cainiao and its partners.

A bit of competition however, seems most likely. In January of this year, YTO Cargo Airlines (an affiliate of both YTO Express and Alibaba) launched flights to Hong Kong where HACTL currently serves as the carrier’s handling agent for its 4x weekly services.

As Cainiao adds global hubs, it can be expected that air freight capacity will be added in parallel. One option is to add capacity through its affiliate airline YTO Cargo Airlines. At present, YTO flights at HKIA are limited to regional flights that utilize a 757-200PCF.

But hub-to-hub flights will require long-haul widebody freighters, which YTO does not currently possess or have on order. In the coming years, YTO has said it expects to add widebody freighters to accommodate cross-border e-commerce shipments.

Regarding the planned facility in Hong Kong, YTO told Cargo Facts that additional flights into Hong Kong are dependent on slot availability and market demand, but added that having a major presence at HKIA could only be beneficial.

Cainiao could also choose to pursue any combination of other lift options such as BSAs, ACMI, or on the extreme – it could acquire aircraft of its own. Cainiao said it has already “opened an airfreight route between Hong Kong and Belgium last month.”

Sources have confirmed to Cargo Facts that while Cainiao does not charter an entire aircraft, e-commerce logistics specialist 4PX charters one leg of Silk Way West-operated 747F flights between LGG and HKG. Cainiao is one of 4PX’s customers utilizing capacity on these flights.

  • Source: Cargo Facts

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